The effect of reverse cycle regulation of the boom on the manufacturing PMI

Recently, the China manufacturing and non Manufacturing Purchasing Managers Index (PMI) released by the service industry survey center of the National Bureau of statistics and the China Federation of logistics and purchasing in December 2019 showed that the manufacturing PMI was 50.2%, which was the same as that of the previous month. It was above the boom and bust line for two consecutive months. The manufacturing industry continued the expansion trend of the previous month, with a steady growth. The non manufacturing business activity index was 53.5%, down 0.9 percentage points from the previous month, and the non manufacturing industry as a whole kept expanding. Zhao Qinghe, Senior Statistician of the service industry investigation center of the National Bureau of statistics, said that the purchasing manager index of manufacturing industry expanded steadily in December, with the following main characteristics: first, production continued to accelerate, and demand continued to expand. Of the 21 industries surveyed, 15 are in the expansion range. Second, the import and export situation improved, foreign orders increased significantly, and the import of raw materials continued to pick up.

The index of new export orders was 50.3%, higher than 1.5% last month, rising to the expansion range for the first time since June 2018; the import index was 49.9%, up 0.1% on month, rising for two consecutive months. Third, the supply and demand situation has improved, and the price index has both picked up. Fourth, the transformation and upgrading have been promoted continuously, and the growth of emerging industries has been good. In terms of PMI of non manufacturing industry, the service industry maintained a rapid growth in December. The service business activity index was 53.0%, down 0.5 percentage points from last month, but higher than the same period last year. The growth rate of the construction industry has slowed down. The business activity index and new order index of the construction industry are 56.7% and 52.9%, down 2.9 and 3.1 percentage points respectively from last month. In terms of industry categories, the business activity index and new order index of housing construction industry are 54.6% and 46.3%, respectively, lower than 9.5 and 8.3 percentage points of last month; the business activity index and new order index of civil engineering construction industry are 57.0% and 60.6%, respectively, higher than 0.7 and 5.3 percentage points of last month. Zhao Qinghe said that as the weather gradually turned cold and the "two festivals" approached, the construction industry overall showed a seasonal decline.

However, affected by factors such as the accelerated implementation of infrastructure construction projects, the number of new engineering contracts signed by the civil engineering construction industry increased significantly and the production was relatively active. In an interview with Securities Daily on January 1, 2020, Wen bin, chief researcher of China Minsheng Bank, said that the official manufacturing PMI in December last year was 50.2%, the same as last month, which exceeded market expectations. The official manufacturing PMI has been above the critical point for two consecutive months, indicating that the effect of counter cyclical regulation continues to show, and the steady state of economic enterprises is further stable. According to the classification index, the production index, new order index and supplier delivery time index are higher than the critical point, reflecting the continuous expansion of production and demand in the manufacturing industry. In addition, the new export order index is 50.3%, which is higher than the critical point for the first time since June 2018, reflecting the improvement of the export market and the pull to the expansion of the manufacturing industry. Lu Zhengwei, chief economist of Industrial Bank, told reporters yesterday that manufacturing activities in December were affected by Spring Festival effect and warm winter effect, showing the characteristics of improved supply and stable demand. At the same time, migrant workers return home ahead of the Spring Festival, leading to a slowdown in construction activities in December. Looking forward to the future, the improvement of the external environment, coupled with the efforts of counter cyclical adjustment policies, will continue to stabilize the economy. Wen Bin said that in the next stage, we should continue to maintain counter cyclical control, accelerate the issuance of special bonds by local governments, guide financial institutions to reduce the financing cost of the real economy through LPR, continue to improve and expand domestic demand, and ensure the smooth operation of the economy.